Posted in GreenBiz
January 13, 2022

A new industrial revolution for a livable climate

GreenBiz

This article originally appeared at WRI.

U.S. industries account for 30 percent of national greenhouse gas (GHG) emissions, while the industrial sector globally accounts for 40 percent of all GHG emissions. Switching to renewable energy addresses only a fraction of industrial emissions. However, there are technologies and approaches ready to reduce emissions from industry, and innovations that could fully decarbonize the sector.

Industry’s contributions to climate change

Since 1990, industrial processes have been one of the fastest-growing global sources of greenhouse gas emissions, nearly tripling over the last three decades. This increase was due in part to rising carbon dioxide emissions, but also the increased use of refrigeration and air conditioning that produce hydrofluorocarbons (HFCs), potent greenhouse gases. Direct industrial sector emissions originate from on-site burning of fuels or process emissions from chemical reactions inherent to the industrial production itself.

Today, direct industrial emissions account for 23 percent of U.S. greenhouse gas emissions, making it the highest-emitting sector after transport and electricity. Adding industrial electricity use brings the total contribution to 30 percent of U.S. emissions. The U.S. Energy Information Administration (EIA) expects U.S. demand for energy from the industrial sector to grow around 36 percent by midcentury.

U.S. emissions by sector (Source: WRI)

The United States is one of over 60 countries to set a target for a net-zero economy by 2050. Reducing carbon emissions about 45 percent below 2010 levels globally by 2030 will give the world the best chance to meet those goals. If we do not meet the 2030 goal, it is theoretically possible to “catch up” if the actions we take now enable us to accelerate emissions reductions in the 20 years after. Starting on the research, development and demonstration (RD&D) needed for many industrial decarbonization solutions can enable those accelerated emissions.

The big four

The largest emitting industrial sectors in the United States — chemicals, refining, cement and steel — are a good place to begin decarbonizing this sector.

Key U.S. heavy industry sub-sectors (Source: WRI)

The chemical sector is the largest emitter of U.S. industrial greenhouse gases (although a much smaller proportion of global emissions) because chemicals are essential building blocks in making plastics, rubbers, foams, dyes, adhesives, soap and detergent that contribute to the manufacture of clothing, packaging, appliances and electronics, vehicles and machinery, office and industrial equipment, pharmaceuticals, personal care products, building materials, furniture and healthcare tools.

Many chemicals are made by refining crude oil, just as oil and gas are. Most U.S. transportation runs on gas and oil, but that is likely to change as electric vehicles become more prevalent, driving down some demand for refining. However, chemicals will continue to require refineries, so these facilities must be decarbonized. Switching to more sustainable fuels and using carbon capture, use and storage (CCUS) can be part of the solution.

Steelmaking accounts for 5 percent of industrial emissions in the United States. The use of green hydrogen, renewable energy and CCUS could offer near- and long-term decarbonization opportunities. Using hydrogen in steel production nearly eliminates direct carbon emissions. Furthermore, new electrolytic steelmaking processes have the potential to drastically reduce steelmaking emissions. A low-carbon product standard for steel in the United States could spur adoption of these technologies while keeping U.S. steel competitive internationally.

Production of cement, the key ingredient in concrete, is responsible for just over 1 percent of U.S. GHG emissions and 7 percent of global emissions. Decarbonizing cement is challenging because the manufacturing process involves heating limestone at extremely high temperatures to produce lime, which emits carbon dioxide. Carbon capture and storage (CCS) and/or a fundamental change to the ingredients that make up cement will be needed to reduce these process emissions. Some options for decarbonizing cement are not commercially available yet, are constrained by resource availability or are dependent on the use of certain inputs or plant-specific technologies. A tradable, low-carbon cement standard would provide a targeted approach to reducing the emissions intensity of the cement sector.

Priority solutions to decarbonize industry (Source: WRI)

Key challenges and solutions to reducing industrial emissions

While the diversity of businesses, products, facility sizes and configurations tend to preclude one-size-fits-all solutions for industrial emissions, several overarching challenges and cross-cutting solutions apply across the sector.

Technological and economic challenges

Heavy industry requires high temperatures, which today are generated almost exclusively by burning fossil fuels. For example, producing certain high-value chemicals requires temperatures close to 1,832 degrees Fahrenheit and blast furnaces producing steel operate at temperatures even above 2,732F.

Electrifying these processes and switching to renewable resources can help reduce emissions in some processes. However, electrification, especially on a large scale, can be impractical and costly with current technologies. Only a few clean generation options can reach sufficiently high temperatures.

CCUS and switching to clean hydrogen fuel to generate heat can eliminate most emissions. CCUS is particularly important to eliminate process emissions that would not be addressed through fuel switching. But in most cases, industrial applications of these technologies are in their costly initial stages. Without decarbonization policies to mandate and incentivize investment, there is no real market signal to adopt CCUS and switch fuels.

Barriers to industrial decarbonization

A price on carbon has been viewed as the most efficient way to reduce emissions throughout the economy. But political resistance has resulted in a sector-by-sector approach to decarbonization in the United States, and a reliance on incentives and sometimes standards in place of mandates. Whether this will work on industrial emissions is yet to be seen.

The U.S. Infrastructure Investment and Jobs Act, signed into law Nov. 15, provides $500 million for industrial emissions demonstration projects that test and validate emissions-reducing technologies in sectors such as cement, iron and steel. Other provisions in the law create programs to design, pilot and demonstrate approaches to put carbon captured from industrial facilities back in the ground permanently. The Build Back Better Act, which cleared the House on Nov. 19, also includes essential provisions to address industrial emissions. The bill would extend and significantly enhance tax credits for carbon sequestration and create a new credit for the production of clean hydrogen. It also includes $4 billion for deploying advanced technologies that can accelerate emission reductions at industrial facilities. The investments in the Build Back Better Act, paired with the Infrastructure Investment and Jobs Act, will put the 2030 emission reduction target within reach.

Incentives for carbon capture are greeted with skepticism from some climate advocates who fear that it will lock in fossil fuel infrastructure and could contribute to continued reliance on fossil fuels at the expense of increasing the use of renewable energy. Local advocates fear the incentives could keep factories operating long past their intended life while failing to curb other pollutants that harm nearby communities. Others have a vision for a world that depends less on industry and features less consumption overall, with manufacturing processes that are smaller, less polluting and more circular.

Industrial producers also face challenges from consumers who may be reluctant to embrace the low-carbon versions of their products. Construction companies may be unable to buy concrete made from zero-carbon cement as it is not yet included in building codes. These products are also at a current disadvantage because they cost more.

The U.S.-led First Movers Coalition, unveiled at the UN climate conference in Glasgow, featured 25 founding member companies that pledged to support innovation needed to achieve net-zero targets by purchasing early supplies of near-zero emissions steel, cement, aluminum and chemicals, among other breakthroughs. Similarly, the Climate Group has launched buyers’ clubs committed to purchasing zero-carbon steel and concrete. Meanwhile, a growing list of steel producers, including the world’s largest, have committed to going carbon-neutral by 2050, and the Portland Cement Associated has published a roadmap to carbon-neutral concrete.

Creating acceptance, and even demand, for low-carbon industrial products throughout the supply chain will take education, changes to industry standards, procurement policies, financial incentives and low-carbon product standards.

The largest emitting industrial sectors in the United States — chemicals, refining, cement and steel — are a good place to begin decarbonizing this sector.

Driving industrial innovation

What needs to be done to decarbonize the industrial sector? Globally, companies are feeling the pressure to align their business models with a net-zero economy. Growing numbers of companies have made commitments to become carbon neutral or meet a science-based target, yet few industrial companies are on these lists. The Energy Transitions Commission outlined a plan for decarbonizing heavy industry and found that it is possible, that the technologies exist or are within reach, and are affordable, costing less than 0.5 percent of global GDP. But it won’t be easy. Policymakers, investors and businesses will have to take bold action in the next decade to get on a path to decarbonization.

The United States is beginning to offer incentives in the industrial sector through tax credits, financing tools and by investing significant dollars into research, development, demonstration and deployment (RDD&D) programs. Collaborations such as the Industrial Innovation Initiative are bringing key industry actors and environmental groups together to identify policies needed to foster this new low-carbon industrial revolution. Their recommendations are designed to “advance technology demonstrations and deployment, infrastructure development, public and private procurement programs and initiatives, and other efforts to drive adoption of low-carbon technologies and practices.”

Fundamentally, consumers of these industrial products need to both accept and demand zero-carbon products, but we have a long way to go. Whether it is simply a resistance to changing the way they do business, cost and quality concerns, or industry standards, buyers along the supply chains will be an essential part of industrial decarbonization. Retail consumers can help create demand for products made with low-carbon processes. Ultimately, elected officials and regulators need to limit pollution from the industrial sectors, both by incentives and standards. Creating a shared vision for that future and shared sense of responsibility among industry, consumers and communities is at the core of the transition to a climate-safe economy.

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